Schmidt: Apple, Google Waging A Cold War

Apple and Google are a bit like the U.S. and U.S.S.R. during the Cold War: They're at odds with one another, but neither is lobbing any real bombs. Instead, the skirmishes are smaller and indirect. That's how Google chairman Eric Schmidt described the relationship between the two tech titans, which are fighting for smartphone supremacy around the world.

"The press would like to write the sort of teenage model of competition, which is, 'I have a gun, you have a gun, who shoots first?'" said Schmidt in an interview with The Wall Street Journal. "The adult way to run a business is to run it more like a country. They have disputes, yet they've actually been able to have huge trade with each other. They're not sending bombs at each other. I think both Tim [Cook, Apple's CEO] and Larry [Page, Google's CEO] have an understanding of this state model. When they and their teams meet, they have just a long list of things to talk about."

Apple and Google are not only combating in the open market, they're combating in courtrooms, too. It's odd, Schmidt noted, that Apple has yet to confront Google head-on. Much like how the Cold War was waged, Apple is attacking Google indirectly by suing Google's hardware partners. Apple has ongoing lawsuits with Samsung, Motorola, and others (though it recently settled with HTC).

Settlement talks are certainly on the table for the two. "Apple and Google are well aware of the legal strategies of each other," said Schmidt. "Part of the conversations that are going on all the time is to talk about them. It's extremely curious that Apple has chosen to sue Google's partners and not Google itself." (How many times did Reagan and Gorbachev meet?)

Schmidt doesn't see a quick end to the patent litigation, though, no matter how often the two companies meet. "It'll continue for a while. Google is doing fine. Apple is doing fine."

On December 6, for example, Apple will face Samsung in a San Jose courtroom in the latest chapter of their patent war. The two companies are at odds with one another in more than 10 countries. The squabbles concern all manner of smartphone, tablet, and 3G/4G cellular patents. Apple has been hounding Samsung since April 2010. Samsung is fighting back -- without the help of Google. The stakes are tremendous considering the size of the two companies' smartphone businesses. Samsung, for example, is expected to sell 60 million smartphones during the fourth quarter alone.

The number of in-progress and pending trials will take years to complete. Could Google and Apple settle them once and for all on their own terms? Possibly, but Schmidt's comments imply such an end is not in the near future.

Interestingly, Google is concerned about Apple's Siri voice assistant (though for the life of me I can't figure out why). Of Siri, Schmidt noted, "Well, it's competition. I mean, in the antitrust filings, we actually use Siri as an example of future 'non-conforming to the Web' competition, which we do worry about." Google's Google Now voice assistant and search tools are more effective than Apple's Siri, but Siri is still serving as an alternative means to perform searches on Apple devices such as iPhones and iPads. Google Now is part of the Android 4.1/4.2 Jelly Bean operating system.

For the moment, Android is the "clear leader" in the smartphone market, according to the figures from IDC. IDC says Android ate up 68% of the smartphone market in 2012, with Apple's iOS trailing at a distant 18%. Android is winning when it comes to the number of devices sold, leaving Apple's iPhone in the dust -- and other competitive platforms even further behind. Though the iPhone 5 and other devices have sold well for Apple, the sheer volume and availability of varied Android smartphones makes it an attractive platform for handset makers, network operators, and consumers.

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